What an IAI is
An Individual Apartment Improvement (IAI) is new equipment or an improvement inside one rent-stabilized or rent-controlled apartment, such as a full kitchen or bathroom renovation, new appliances, new windows (when not part of a building-wide job) or new flooring with new subflooring. The owner can add a set fraction of the cost to the legal rent. Unlike a Major Capital Improvement, a first-tier IAI needs no DHCR approval order, but the owner must file a notification (form RN-19N) with before-and-after photos and keep proof of every dollar. The larger second tier needs a DHCR eligibility order before work starts.
IAI rules since October 17, 2024
- First tier cap
- $30,000
- 1/168 (35 or fewer units) or 1/180 (more than 35)
- First tier maximum increase
- $178.57 / $166.67
- per month, permanent
- Second tier cap
- $50,000
- vacant, DHCR-certified units; 1/144 or 1/156
- Second tier maximum increase
- $347.22 / $320.51
- per month, permanent
How the calculation works
The monthly increase is the eligible cost divided by a fixed number. The eligible cost is the documented, reasonable cost of the work including installation, but not finance charges, work paid for by insurance, or labor by the owner’s own employees doing their normal duties. It is capped: DHCR describes the limits as applying over a 15-year period, and the cap for the tier is reduced by whatever IAI cost the owner has already been granted for that apartment since June 14, 2019. IAIs from before June 14, 2019 don’t count against it.
| Work took effect | 35 or fewer units | More than 35 units | Cap | Lasts |
|---|---|---|---|---|
| Before June 14, 2019 | 1/40 | 1/60 | — | Permanent |
| June 14, 2019 – Oct 16, 2024 | 1/168 | 1/180 | $15,000, max 3 IAIs in 15 years | 30 years |
| Oct 17, 2024 on, first tier | 1/168 | 1/180 | $30,000 | Permanent |
| Oct 17, 2024 on, second tier | 1/144 | 1/156 | $50,000 | Permanent |
Worked example
An owner renovates the kitchen of a vacant apartment in a 20-unit building for $24,000 in 2026. It’s a first-tier IAI, and the building has 35 or fewer apartments, so the increase is $24,000 ÷ 168 = $142.86 a month. A legal rent of $1,900 becomes $2,042.86, permanently. In a 60-unit building the same job adds $24,000 ÷ 180 = $133.33.
Now say the owner had already taken a $12,000 IAI for that apartment in 2021. That counts against the $30,000 limit, leaving $18,000. Only $18,000 of the new kitchen can be used: $18,000 ÷ 168 = $107.14 a month. DHCR says the 2021 increase stays under the law in effect when it was made; under those 2019 rules an IAI was temporary and had to come off the rent 30 years after it took effect.
The second tier ($50,000)
The larger tier is narrow. It applies only to a vacant apartment that either:
- was timely registered with DHCR as vacant for 2022, 2023 and 2024 (an owner can use this route only once), or
- became vacant after at least 25 years of continuous occupancy immediately before the work.
The owner must first get a DHCR order certifying eligibility, then notify DHCR before work starts with photos, permits, evidence the old items were substandard or past their useful life, and an affirmation that it has no harassment or willful overcharge findings in the past five years. After the work, it files invoices, proof of payment and photos, and pays a 1% fee on the claimed cost (for example, $450 on a $45,000 job). Missing a filing makes the increase non-recoverable.
Proof DHCR looks for
DHCR expects five items for every IAI: cancelled checks or proof of electronic payment, an invoice marked paid in full, a signed contract, a contractor’s affidavit that the work was completed and paid, and before-and-after photos. Lump-sum bills, cash payments over $10,000 and contractors related to the owner get extra scrutiny or are disallowed. Overcharges caused by disallowed IAIs can carry treble damages.
What to do next
Tenants can check what was claimed by requesting the apartment’s rent history and comparing it with the lease rider. If the numbers don’t add up, use the rent overcharge estimator. Owners should report the IAI on the next annual rent registration. For building-wide work, use the MCI rent increase calculator instead.